Starting a business in
🇲🇾Malaysia
Checked November 4, 2026 · How we score
Corporate tax
24%
Top income tax
30%
Setup from
$1,500
all-in, first year
Time to form
7 days
visit usually needed
Taxes in Malaysia
| Corporate income tax | 24% 24% standard rate. Resident SMEs (paid-up capital up to RM2.5m, gross income under RM50m) pay 15% on the first RM150,000, 17% on the next RM450,000 and 24% above. Malaysia taxes income accruing in or derived from Malaysia; foreign-source income received by companies is taxable from 2022 with an exemption for dividends and some categories subject to conditions. Foreign-sourced dividend and other conditional exemptions for individuals run to 2036. |
|---|---|
| Personal income tax (top) | 30% Residents (182+ days) pay progressive rates from 0% to 30% (30% above RM2m). Non-residents pay a flat 30%. Foreign-sourced income received in Malaysia by resident individuals is exempt until 31 December 2036 (not for partnerships, and with conditions for companies). Confirm current LHDN guidance before relying on this. |
| Tax system | Territorial (foreign income untaxed) |
| Capital gains tax | 0%No CGT for individuals on most assets. Real property gains tax (RPGT) applies to property, and since 2024 companies pay 10% on gains from unlisted shares. |
| Dividend withholding (non-residents) | 0% |
| VAT / GST | 6% |
| Social security | Sales tax (5% or 10%) and service tax (generally 6%, 8% on certain services from 2024) apply instead of VAT. EPF is 13% employer and 11% employee for citizens and PRs; EPF is optional for foreign workers (2% each). |
Forming a company in Malaysia
| Usual entity | Sdn Bhd (private limited company) |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $1,500–$4,000 |
| Annual running cost | $2,000–$5,000 |
| Time to incorporate | 7 days |
| Form remotely as a foreigner | No |
| Local director required | Yes |
| Local address required | Yes |
| Owners on public register | Yes |
| Statutory audit for small companies | Yes |
| Business banking for non-residents | Moderate |
Residency and visas
DE Rantau is a 3-12 month pass renewable for up to two years (not a path to PR), for remote workers earning about $24,000 a year (MDEC publishes tiers by profession; confirm the current threshold). MM2H was relaunched in 2024 with Silver/Gold/Platinum tiers and fixed deposits starting around RM500,000 plus property and fee requirements, with no PR route. Company owners usually use employment passes or expatriate posts.
| Digital nomad visa | DE Rantau Nomad Pass, $2,000/month income |
|---|---|
| Golden visa | Yes, from $110k |
| Ease of residency for founders | 3/5 (1 = easiest) |
Special tax regimes
DE Rantau Nomad Pass
Pass for remote workers in tech and non-tech roles with income of about $24,000 a year or more; spouse and children can be added, but local work is not allowed.
Malaysia My Second Home (MM2H)
Long-stay visa (5, 10, 20 years depending on Silver, Gold or Platinum tier) requiring a fixed deposit, minimum property purchase and offshore income; the revamped programme does not lead to permanent residence.
Foreign-source income exemption
Foreign-sourced income received in Malaysia by resident individuals (other than through a partnership) is exempt until 2036; companies and LLPs get conditional exemptions, notably for dividends.
Labuan International Business and Financial Centre
Offshore regime with 3% tax on net profits from trading activities that meet substance requirements, or 0% on non-trading income, with yearly fees.
Pros and cons
Why founders pick Malaysia
- Territorial tax on individuals with foreign income exempt until 2036 (subject to conditions)
- Very low living and setup costs
- DE Rantau and MM2H give multiple residency routes
- No dividend withholding tax
Watch out for
- 24% standard corporate rate, with a lower SME rate only on the first RM600,000
- Foreign-owned companies face capital and sector rules, and a resident director and local company secretary are required
- Audits are required for most companies
- Visa rules change often
- Banking for non-residents needs in-person KYC
Best for: Remote workers wanting a low-cost Asian base with DE Rantau · Tech and services companies serving Southeast Asia · Offshore structures using Labuan
Malaysia: common questions
Does Malaysia tax foreign income?
Foreign-sourced income received by resident individuals is currently exempt (until 31 December 2036), with some exclusions such as partnership income. Companies' foreign income is taxable from 2022 with conditional exemptions for dividends, so check the latest LHDN rules.
What is the corporate tax rate in Malaysia?
The standard rate is 24%. Qualifying SMEs pay 15% on the first RM150,000 of profit, 17% on the next RM450,000 and 24% above that.
How much income do you need for the DE Rantau pass?
The pass generally requires about $24,000 a year (about $2,000 a month) of income from outside Malaysia, with MDEC applying different thresholds by profession. Check the official MDEC FAQ for the current figure and fee, which is around RM1,000 for the main applicant.
Can foreigners own 100% of a Malaysian company?
Yes in most services and technology sectors, though some require a local partner or a minimum paid-up capital (for example, wholesale and retail). A Sdn Bhd needs at least one director who is ordinarily resident in Malaysia and a licensed company secretary.
How much does it cost to set up a company in Malaysia?
Incorporating a Sdn Bhd through a company secretary typically costs about $1,500 to $4,000 including SSM fees and a nominee director if needed. Yearly costs for secretary, audit and tax usually run $2,000 to $5,000.
Sources
- Inland Revenue Board of Malaysia (LHDN)
- Companies Commission of Malaysia (SSM)
- MDEC - DE Rantau
- PwC Tax Summaries - Malaysia
Compare Malaysia
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Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.